In his letter Ballmer expressed frustration at this "limited interaction," stating that what little action the pair had was not "meaningful." He states that this is "unfortunate." Ballmer fumes, "Our goal in making such a generous offer was to create the basis for a
speedy and ultimately friendly transaction. Despite this, the pace of
the last two months has been anything but speedy."

Ballmer writes that Yahoo has two choices -- accept the offer within three weeks and prepare for the merger in earnest or face a proxy battle in which Microsoft will seek to oust the Yahoo's board of directors and replace them with a new pro-Microsoft board.

Microsoft increasing aggression in its hostile takeover attempt seems to confirm reports by analyst that Microsoft would not raise its bid, which offers a 62 percent premium on the company. Ballmer writes angrily, "The public equity markets and overall economic conditions have weakened considerably. At the same time, public indicators suggest that Yahoo!’s search and
page view shares have declined. Finally, you have adopted new plans at
the company that have made any change of control more costly."

Microsoft hopes to avoid a proxy battle, but is willing to enter one if necessary. Such a battle would be costly both financially and to the reputation of Microsoft. However, it would be particularly costly to Yahoo, which would be rocked by having its board deposed. Ballmer states that if the terms are not met, the proxy battle will begin in three weeks. Warns Ballmer, "If we are forced to take an offer directly to your shareholders, that
action will have an undesirable impact on the value of your company."

A Yahoo spokesman would not comment on the letter. For the full Ballmer letter, refer here.

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